What is (PPF)Public Provident Fund?

A Public Provident Fund generally known as PPF is basically a savings scheme offered specially by the Government of India. The interest under the Public Provident Fund account is paid by the government of India. It is also tax-free. It is a scheme that offers long term investments backed up by the Government of India.

Here the Investors can invest minimum Rs. 500 to maximum Rs. 1,50,000 in one financial year and can get the facilities such as loan, withdrawal and extension of account.

List of banks with which you can open a PPF account-

HDFC Bank

Allahabad Bank

ICICI Bank

Central Bank of India

Axis Bank

Canara Bank

State Bank of India

Union Bank of India

Bank of Baroda

Indian Bank

IDBI Bank

United Bank of India

Punjab National Bank

Dena Bank

Canara Bank

Vijaya Bank

Oriental Bank of Commerce

Bank of Maharashtra

Bank of India

IMPORTANT NEWS

Like PPF, investment in Equity Linked Saving Scheme (ELSS) is eligible for tax deduction under Section 80C. PPF deposits have made a return at 8% in last 10 years, investments in ELSS have returned between 15% to 18%. Adding to this, the lock-in period of ELSS is 3 years while for PPF it is 15 years. If you wish to take a moderate risk to earn higher returns, you can invest in ELSS.

ELIGIBILITY FOR OPENING PPF ACCOUNT

(i)Only an Indian resident can open a PPF account.

(ii) An individual can open only one single PPF account.

(iii) NRIs who had opened a Public Provident Fund account while they were resident Indians some time back, can operate the account until 15 years with no option for extending it further.

(iv) Minors can also open a Public Provident Fund account based on a legal age proof identity.

(v) PPF accounts prior 2005, can be operated till the maturity period of 15 years with no extensions.

(vi) The applicable Public Provident Fund interest rate for 1st April to 30th June 2019 (Q1 FY 2019-20) has been fixed at 8.0%. The interest rate for January – March 2019 was also 8%.

STEPS TO OPEN A PPF ACCOUNT

A Public Provident Fund account can be opened in any above mentioned designated bank. Following are the documents required to open a Public Provident Fund account :

(i) Fill a Public Provident Fund Account opening form which is available at the bank or the Indian Post office or online portals.

LIST OF ALL FORMS IN A PPF ACCOUNT

Look for the below table where we represent all the required forms which are related to the PPF account-

List of Forms

Nature of the Form

Form A

For opening a new Public Provident Fund account.

Form B

For adding money in the PPF account and repaying the loans against the Public Provident Fund account.

Form C

For partial withdrawals from the Public Provident Fund account after 7th financial year.

Form D

To apply for a loan against your PPF account.

Form E

Adding a nominee to your Public Provident Fund account.

Form F

Changing the nomination of your PPF account.

Form G

For claiming the funds in a Public Provident Fund account by a nominee.

Form H

For extending the maturity of the PPF account (after 15years)

INACTIVATION AND REACTIVATION OF PPF ACCOUNT

(i) It is very important to keep in mind that the money has to be deposited or invested each year to keep a Public Provident Fund account active. The minimum amount depositing requirement is Rs.500 which should be met each financial year, if not, the Public Provident Fund account from that financial year is declared inactive.

(ii) Loan facility cannot be availed when the Public Provident Fund account is inactive.

(iii) To reactivate the Public Provident Fund account an account holder has to pay a penalty of Rs.50 per year for inactivation, and the minimum amount cumulative for each inactive year as well.

TAX IMPLICATIONS ON A PPF ACCOUNT

PPF falls under the EEE (Exempt, Exempt, Exempt) tax basket. Investments into the Public Provident Fund account are eligible for tax benefits under Section 80C of the Income Tax Act. The total amount that would be received upon maturity and the interest earned is both exempted from income tax. This is the biggest achievement of this scheme.

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